US stocks hit by election jitters

CONTAGIOUS CONCERN:Aside from the nerves caused by the US presidential battle, investors were further depressed by a string of big firms falling short of revenue targets

AFP, NEW YORK

More reports of falling earnings and slashed forecasts sent US stocks lower for another week, with uncertainty over the Nov. 6 US presidential election and what will follow, policy-wise, increasingly holding investors’ sway.

Company after company cited slow growth in China, the eurozone crisis and uncertainty over US policy — particularly the “fiscal cliff” — as they reported slowing sales and tighter margins.

While the news was not all bad — a mix of companies like Comcast Corp, Facebook Inc, Yahoo Inc and Boeing Co all did well — the general picture was glum.

Even companies like Caterpillar Inc, which beat analysts’ expectations on profits, fell short on revenues and warned of tougher conditions in the coming year.

“As we’ve moved through the year, we’ve seen continued economic weakening and uncertainty. It’s definitely impacting our business with dealers intending to lower inventories and mining customers delaying some projects and reducing orders,” Caterpillar chief executive Doug Oberhelman said.

That set the mood for trade for the week. Ending at 13,107.21 on Friday, the Dow Jones Industrial Average was off 1.77 percent for the period.

The S&P 500 gave up 1.48 percent to 1,411.94 and the NASDAQ Composite slipped 0.59 percent to 2,987.95.

Apple profits continued to soar and the company offset its target miss with the launch of the iPad Mini and updated its other products, but its slower growth and lowered guidance was taken as a sign of tightness in consumer pockets.

Apple “will not be immune to the undercurrent of economic sluggishness, especially in the consumer space, where higher gasoline prices are leaving consumers with little money for their next favorite gadget,” Global Equities Research’s Trip Chowdhry said.

The picture was not helped by Friday’s report that US economic growth had picked up pace to 2 percent at an annual rate in the third quarter, after the turgid 1.3 percent second quarter.

That confirmed the view of the US Federal Reserve’s policy board that the economy still faces hurdles.

IHS Global Insight US economists Nigel Gault and Paul Edelstein said the low gear economy would remain a drag on profits.

“The details confirm our view that the economy will further experience modest but sub-par growth,” they said in an analysis on Friday.

“From a corporate earnings perspective, this is unwelcome news. Profits had been growing at a double-digit pace as companies benefited from strong overseas demand and productivity enhancements that compensated for domestic weakness,” Gault and Edelstein said, adding “But the latest earnings reports indicate that those opportunities are harder to exploit, leading many companies to downgrade their profit outlook.”

The coming week will be dominated by elections talk, ahead of the vote on Tuesday, with US President Barack Obama and Republican challenger Mitt Romney neck-and-neck.

Also looming is a mega storm expected to hit the US East Coast on Tuesday which has the potential of causing widespread damage.

That aside, the earnings season that peaks out next week is likely to confirm that picture, with reports coming in from Pfizer, the three big US auto companies, ExxonMobil Corp, AIG Inc, Chevron Corp, News Corp, Walt Disney Co, Cisco, Dell Inc and Hewlett-Packard Inc.